Europe’s technocrats ill-cast as political saviors

Commentary: They’re smart, but do they have the common touch?

LONDON (MarketWatch) — T-time has arrived in Europe in a big way. It’s time for technocrats.

Lucas Papademos has become caretaker Greek prime minister. Mario Monti, the former European commissioner and president of Bocconi University, may be heading for Silvio Berlusconi’s hot seat in Rome. Jürgen Stark and Lorenzo Bini Smaghi, important personalities on the board of the European Central Bank, are both leaving at end-December, well before expiry of their terms. Who knows whether some form of political office beckons for them? We will no doubt see and hear more of them in the New Year.

What do these erudite people have in common? They understand and enjoy speaking to the financial markets and economists. They’re good at formulating wise and sometimes witty sentences on monetary policies. They’re not very good at speaking to ordinary citizens. To be honest, that’s not what they have been asked to do up to now. Well, at least for some of them, that’s now changing.

Reuters

Lucas Papademos is a very smart man, but can he speak to the Greeks?

Lucas Papademos, a former governor of the Bank of Greece and vice president of the European Central Bank, now has one of the most difficult jobs in world politics without experience in political office. Could a technocrat’s lack of a common touch be, to coin a phrase, his Achilles heel?

Anyone who expects technocrats to work miracles must, however, ponder an essential fact. Economic and monetary union has been above all a “top down” project dreamed up by political and business leaders and pushed through without undue consultation or communication with the people. Establishing governments under technocratic leadership can therefore be no more than an emergency stop-gap pending the appointment of leaders with a democratic mandate to force through necessary reforms — or, otherwise, to face a future outside the euro
EURUSD, +0.0730%

Papademos is a delightful man, scholarly, pleasant, self-effacing, courteous, engagingly shy, a benign companion and an excellent listener (something he had to do a lot while Jean-Claude Trichet was giving press conferences. Papademos had to sit by the former president’s side and normally say nothing). He has an excellent academic pedigree, especially in America. He has worked at the Federal Reserve Bank of Boston. His colleagues at the European Central Bank had only good words to say about him. The trouble is that he has no track record at actually getting things done in the political arena.

In his airy office at the European Central Bank four years ago, Papademos spelled out to me on two occasions in great detail and with considerable plausibility all the things that countries like Greece were doing wrong. He was particularly strong on the shortcomings of the ECB’s communications policy. The Greeks had not understood, he said, that, with entry into monetary union, the framework for their actions had fundamentally changed because they could no longer devalue the currency. Adjustment would have to take place in other ways.

I asked him: How much of his job was spent speaking Greek? How many times a month did he address his countrymen, in either large or small circles, to relay the important message that he was giving me in the comfort of his office? He didn’t do that at all, he replied. The ECB vice president’s rule was not to go to Greece on work-related occasions. He preferred to leave to his successor at the Bank of Greece the task of lecturing his countrymen on how they needed to improve their economy.

ECB

Need a technocrat? Jürgen Stark will soon be available.

The problems stemming from this lack of communication were spelled out with unusual bluntness in a speech in Berlin last Thursday by Jürgen Stark, who announced his resignation from the ECB board in September but opted to stay on until the end of the year. Judging by a sudden spate of speaking engagements — no less than seven listed for the past week or so — Stark is limbering up for some settling of scores when he finally steps down.

In Berlin he was in excoriating form, lambasting the “political elites” for their failure to “communicate what needs to be done” and warning that the West faced a grave crisis from new alliances among the emerging market economies that are now the main creditors and engines of growth.

Stark had mixed feeling about technocrats, praising both Papademos and Monti for their personal qualities but also pointing out that such leaders had to be given “democratic legitimacy.” Asked whether he might be available, he replied that such figures would only take over in cases of “emergency,” which he plainly doesn’t see happening in his native Germany. I asked him good humoredly: Does this mean that the only country in Europe where he might be available would be the U.K.? With equal good humor, and a wry twitch of his trademark pencil moustache, he replied: “I am a European.”

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